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As financial firms weaken, stocks lose steam

(Agencies) Updated: 2015-11-11 09:53

Prospects of reforms over the next five years limit losses even as 'new economy' shares rally on link hopes

Share prices dipped on Tuesday after financial firms weakened and failed to drive gains in the broad market, but losses were limited on prospects of economic and financial reforms.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.2 percent, to 3,833.24 points at the close, while the Shanghai Composite Index lost 0.1 percent, to 3,640.49 points.

China will deliver a slew of economic and financial reforms over the next five years and strengthen supervision of its financial system to prevent "systemic risk", central bank governor Zhou Xiaochuan said.

Shenzhen's startup board ChiNext Index rose 1.1 percent to 3,107.59 points. The CSI300 Materials Index outperformed, up 2.4 percent, while the financials index was down 0.2 percent and the banking index eased 0.1 percent.

The Shanghai Composite Index trimmed a loss of as much as 1.1 percent as brokerages and stocks reflecting the "new economy" like technology and healthcare rallied amid optimism over the start of the planned stocks link between Hong Kong and Shenzhen, home to many of China's growth companies and the best-performing stocks.

CITIC Securities Co Ltd, the nation's biggest-listed brokerage, rose 1.4 percent in Shanghai, extending a rally over the past month to 42 percent. GF Securities Co Ltd jumped 3.3 percent for a 20 percent gain this month alone.

ChiNext stocks will be included in the link even as the timing of the start is uncertain, Liu Fuzhong, vice-director of strategy and international relations at the Shenzhen Stock Exchange, said in Shanghai.

The Shenzhen-listed ChiNext Index has gained 87 percent this year, compared with a 13 percent advance for the Shanghai Composite Index. There is a "high conviction" that China will announce the timing of the link within the next two quarters, Citigroup Inc analysts led by Jason Sun wrote in a note.

Meanwhile, Chinese mainland stocks fell the most in a week in Hong Kong as slower-than-forecast inflation increased concern that demand is weakening in the world's second-biggest economy. The Hang Seng Index fell 1.4 percent to 22,401.70 points, while the China Enterprises Index lost 1.8 percent, to 10,314.74 points, dragged down by power producers and banks. China's Consumer Price Index rose 1.3 percent in October, official data on Tuesday showed, compared with the 1.5 percent median estimate in a Bloomberg survey.

"There is a bit of a pullback after the recent rally with the CPI not helping," said Gerry Alfonso, a trader at Shenwan Hongyuan Group Co in Shanghai. "The low CPI figure is an indication that domestic consumption is perhaps a bit weaker than expected and that can create concerns. Banks are under-performing as the rally in recent days was very significant and investors are cashing in."

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